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Trusts and Trustees: What Agents Should Know
By Barbara Pronin
Properties transferred into a revocable trust are commonplace as part of the succession strategy recommended by most estate planning professionals.
 
Properly prepared, a revocable living trust can save a family the time and cost of probate when the homeowner dies. It can also save on estate taxes and protect inheritances for children and grandchildren, while allowing the trustees, typically the owners of the trust, to retain control of their assets during their lifetime. So, it’s no surprise that a growing number of homeowners are choosing to establish a living trust instead of relying on a will.
 
To be legally binding, the majority of the trustee’s assets – including bank accounts and title to their home—must be transferred out of individual or joint ownership and into the trust. It’s a fairly simple process. Typically, the attorney drawing up the trust will transfer real estate assets to the trust and provide the trustee with instructions for transferring their bank accounts and other assets to it as well.
 
For a real estate agent, it can be disconcerting to discover that the property you are about to list for sale is owned by a trust. But since the trustee retains control of his/her assets, including the right to buy or sell them, there is little or no difference when it comes to listing the home, negotiating the sale, or transferring title to the new owner.
 
As your escrow partner, we will ask to see a copy of the trust documents so we can establish that the trust has clear title and the right to sell the property. At closing, the trustee, or joint trustees, will be asked to sign over the deed transferring ownership to the buyer.
 
If the original trustee has died or become incapacitated, the paperwork can become more complex – and in most cases, if the trustee is unavailable, a Power Of Attorney cannot be designated by the trustee.  For the sale to successfully close, it is up to the escrow/title officer to ensure that the documentation is in place identifying the new trustee.  

In short, if an original trustee is still living but unable to perform the duties due to illness, being out of the country or other reasons, a letter must transfer authority to the successor trustee.             In the case of death of the original trustee, a death Certificate and an Affidavit of Death of Trustee must be signed by the successor trustee.

At closing, proceeds from the sale of the home are paid to the owner of record – in this case, the trust. As long as the trustee has a bank account in the name of the trust, payment will be made to that account, and the seller – who is also the trustee – will continue to retain control.
 
Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice.  You are encouraged to consult your legal, tax or investment professional for specific advice.  The material is meant for general illustration and/or informational purposes only.  Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. 

 

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